Investing in high-yield dividend stocks can help generate significant passive income over time. However, investors should focus on shares of well-established companies with a solid dividend payment history, growing earnings base, and commitment to rewarding shareholders with regular payouts.
Against this backdrop, here are three high-yield dividend stocks to buy right now. These Canadian stocks with over 6% yield have fundamentally strong businesses with growing earnings, thus supporting higher dividend distributions. Let’s dig deeper.
BCE
One of the top high-yield and reliable dividend stocks right now is BCE (TSX: BCE). The Canadian communication giant currently pays a quarterly dividend of $0.998 per share and offers a high yield of 8.7%, based on a closing price of $45.88 as of October 3.
BCE focuses on enhancing its shareholder value with higher dividend payments in all market conditions. This is reflected in its stellar dividend payment history. BCE raised its dividend for 16 consecutive years. Its dividend payouts are supported by its ability to grow earnings in all market conditions.
BCE’s diverse product offerings, extensive wireline and wireless network, large customer base, and multiple distribution channels support its growth—further, the company’s focus on cost efficiency cushions its earnings and drives dividend payments.
BCE is transforming into a technology services and digital media company to diversify its revenue and accelerate growth. Thanks to this move, BCE benefits from higher digital ad revenue and is poised to gain from its expansion in cybersecurity, cloud computing, and digital workflow automation.
Overall, BCE’s transition towards tech and media, growing digital ad business, focus on increasing customer base with efficiency, and integrating artificial intelligence (AI) to generate cost savings bode well for future earnings growth. This will enable the telecom company to reward its shareholders with higher dividend payments year after year.
TC Energy
TC Energy (TSX: TRP) is another leading Canadian company known for rewarding its shareholders with consistent payouts, dividend growth, and high yields. TC Energy has raised its dividend by about 7% annually for the last 24 consecutive years. Further, the company expects to increase its dividend by 3-5% every year over the long term. Besides higher dividends, this energy infrastructure company offers a high yield of about 6.4%.
Thanks to its utility-like assets, regulated business model, and diversified revenue streams, TC Energy has been generating steady and predictable cash flows that support its payouts. Further, its payouts remain safe as most of its earnings stem from its rate-regulated assets and long-term contracts.
Looking ahead, the company’s long-life infrastructure assets, higher system utilization, commercial arrangements, and $31 billion secured projects will generate significant earnings in the coming years and support its higher payouts.
Pizza Pizza Royalty
Investors looking for high yields can also buy Pizza Pizza Royalty (TSX: PZA) stock. The company, which franchises and operates a network of quick-service restaurants, offers monthly dividend payments of $0.077 per share. This translates into a solid yield of 7.1% near the current levels.
Notably, Pizza Pizza Royalty distributes all of its cash to investors after setting aside necessary reserves, which shows the company’s commitment to rewarding its shareholders. Thanks to its diversified income model and ability to generate steady revenues through royalty income and food and beverage sales, the company has been increasing its earnings and boosting shareholder value via higher payouts.
In 2023, the company announced three dividend increases, reflecting a 10.7% growth in payouts. This trend could be sustained in the coming years. Notably, its diversified revenue streams, expanding network of restaurants, strategic menu pricing, and ongoing food quality and technology investments will likely bolster its cash flows and future payouts.
